Inhibitory interneurons of the visual cortex powerfully shape the responses of their target cells. As our knowledge of cortical inhibitory neuron types has grown, it has become clear that they participate in inhibitory as well as disinhibitory circuit, and are influenced by bottom-up as well as top-down inputs. The individual and collective responses of neurons in successive stages of cortical processing are also shaped by contextual influences, and are crucially modulated by task-dependent behavior. The goal of this proposal is to reveal mechanisms of excitatory-inhibitory interactions and their role in contextual modulation in visual cortex, using a range of approaches that include unique mouse lines, cell-specific targeted recordings, high-density 2-photon calcium imaging of 3-dimensional volumes, novel optogenetic probes and paradigms, specific control of modulatory systems, and behavioral paradigms coupled with dissection of area-specific neuronal responses. We hypothesize that inhibitory circuits can dynamically regulate both the amplitude and the timing of cortical activity depending on behavioral context. To clarify the functional impact of different inhibitory neuron classes on the amplitude of responses in their target pyramidal cells, we will use a novel single-pulse optogenetic probe. Our hypothesis is that temporal coactivation of these neurons and their target cells dynamically dictates their function within intact circuits (Aim 1). Additionally, many inhibitory subtypes express receptors for acetylcholine (ACh), a neuromodulator known to strongly affect visual cortical activity during behavior, leading to changes in the timing of population activity: desynchronization in the local field potential and reduced correlation between neurons, which together improve coding of visual stimuli. We will use targeted in vivo and slice recordings in combination with optogenetic techniques in specific mouse lines to investigate both the effects of ACh on defined interneuron types, as well as the causal role of these cell types in mediating cholinergic effects on cortical processing (Aim 2). Changes in both response amplitude and timing have also been proposed to improve sensory processing during attention-demanding behavior. We will develop a visual discrimination task for mice and use large-scale (>1000 neurons simultaneously) 2-photon calcium imaging to measure neural responses during performance of the task (engaged) or during passive viewing of the same stimuli (passive) (Aim 3). Using specific mouse lines, we will measure responses from identified excitatory and inhibitory populations, from primary visual and posterior parietal cortex as well as from cholinergic axons in the visual cortex. We will investigate cell-specific changes in firing rate, between-neuron correlations, and between-trial reliability as a function of behavioral engagement. Together, these experiments should provide fundamental information on the circuits and pathways by which contextual influences shape cortical processing, and reveal mechanisms relevant to dysfunction in a wide range of brain disorders.